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Question
From a point of intersection of two demand curves, a flatter demand curve shows higher elasticity of demand.
From a point of intersection of two demand curves, a flatter demand curve shows higher elasticity of demand.
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Solution
The correct option is A True
True. Because, at the point of intersection:
- percentage change in price is the same for both the demand curves.
- initial quantity demanded is the same for both the demand curves. Change in quantity demanded is higher in case of flatter demand curve. Implying that percentage change in quantity demanded in response to a given percentage change in price is higher corresponding to the flatter demand curve.
True. Because, at the point of intersection:
- percentage change in price is the same for both the demand curves.
- initial quantity demanded is the same for both the demand curves. Change in quantity demanded is higher in case of flatter demand curve. Implying that percentage change in quantity demanded in response to a given percentage change in price is higher corresponding to the flatter demand curve.
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